Coverage litigation resolves disputes about the existence and scope of insurance for a loss. It includes declaratory judgment actions, breach of contract and bad faith suits by policyholders, and contribution or allocation actions between carriers in a tower.
It typically runs parallel to the underlying liability case and is handled by separate coverage counsel rather than appointed defense counsel.
Alternative Names:
Coverage Dispute, Insurance Coverage Litigation
Why it Matters?
Coverage litigation determines who funds the defense and who pays the loss, which in long-tail and catastrophic claims is often larger than the underlying dispute. It also creates discovery friction: claim files, reserves, and communications between defense counsel and the carrier become discoverable in ways they never would in the liability case, which is why the tripartite relationship must be managed carefully from the start.
Frequently Confused with
Related terms
Frequently asked questions
Who represents the insured in coverage litigation?
Are reserves discoverable in coverage litigation?
